Labor Smart Inc (LTNC)

[DD2Gain]

RED FLAGS AND FBI/SEC INVESTIGATIONS:

The company is on track for well over $3 million in losses on "around" $21 million in revenue. It's currently at $2.5 million in losses. Last quarter there would have been close to $1.5 million in losses if Schadel hadn't recorded a gain of $1 million for the sale of 5 branches. I'm guessing that total losses will be over $4 million for this year alone.

If revenue for 2015 totals $21 million as the CEO projected with 30 branches at the beginning of the year and 20 branches by the beginning of the 3rd quarter, what does that say about the direction of this company when last year started off with only 6 branches and ended with 15 generating total revenue of $24 million? Remember also that half of those branches were in their first year. All branches now are well over a year old.


Let's look at some other info regarding the recent conference call:

A: The stock buyback program is a complete joke when he's simultaneously talking about 500 million shares for a supposed employee stock program ESPECIALLY when we factor that a traditional employee stock program was previously cancelled. If 500 million shares is going to (somehow...they're privately owned by the CEO) be the employee stock account, then what the hell is the AS supposed to be while the CEO holds on to over 1.6 billion shares? Remember...10% controlling interest is the goal. Doesn't sound like he intends to buy back much of anything.

B: Convertible note holders most certainly can do conversions in the event Schadel misses any of the monthly payments he has allegedly negotiated with late notes. Furthermore, if we look at the recent 8K we see that Schadel himself openly reserves the right to convert the debt. Considering that Schadel couldn't afford the notes when he was generating more revenue with fewer branches there is only one direction that arrangement can go. And since conversions are absolutely still on the table what will come of that 3-5x share reserves he repeatedly raised the AS to cover in the past?

C: The "True debt" is $3.5 million as reported in the last Q- not 45% of it- because there is no math in the world that can pay late debt with nothing.

D: The Command Center fiasco is Schadel trying every EXPENSIVE LEGAL TRICK he can to drag on litigation over a debt he admits he owes. Bear in mind that speaking on the "intent" of Command Center to encourage other creditors to force bankruptcy is a clever legal maneuver that is likely the sole reason the judge dismissed a summary judgment because LaborSMART's argument HAS to be given due attention. "Intent" is a very difficult thing to prove and we're talking tortious interference here. Now, if Command Center blatantly tried such a stupid thing, then it's possible that there is a case, but we have seen enough from Schadel over the years to know full well that he is clever with his words to manipulate his shareholders and this appears to be just more of the same old Schadel.

E: The Skill Corps platform and Temp Buddy nonsense is simply nonsense wrapped in "billion dollar idea" rainbows. He is blowing hundreds of thousands of dollars in cash on unproven startups while he is struggling to prove he is anything but a complete fiscal failure.

F: The 10% stake of Staffing Group (TSGL) that he used $165,000 of company capital to acquire is such an obvious farce I can't believe it even needs to be addressed. But let's go ahead and take a look at an FBI investigation into stock manipulation of TSGL that has ensnared more people as recently as a month ago, shall we? The folks involved look awfully similar to many of the characters Schadel has borrowed money from who have also had the attention of the SEC:

www.securitieslawyersblog.com/2014/07/23/investor-alert-brokers-matthew-bell-craig-josephberg-indicted-codesmart-holdings-otc-iten-scam/#more-1255

November 6th, 2015

In a parallel action, the Securities and Exchange Commission brought stock manipulation charges Wednesday against Morris, Ofsink and Halcyon's Ronald Heineman. The regulator had previously brought charges in July 2014 against Discala, Josephberg, Wexler and broker Matthew Bird.

"Brokers serve important gatekeeper functions in our markets and deterring market manipulation is among them," said Joseph Sansone, co-chief of enforcement for the SEC's market abuse unit, in a statement. "We allege that Morris and Heineman didn't just fail to deter the stock fraud being perpetrated at their brokerage firm, they actively participated in it."

The indictment alleges that Ofsink and others agreed to defraud investors and potential investors in CodeSmart, Cubed Inc., StarStream Entertainment Inc. and the Staffing Group Ltd., between October 2012 and July 2014. The DOJ alleges that the group conspired to control the prices and trading volumes of the companies by issuing misleading press releases and false SEC filings, and hid their ownership in the four companies, rigged price movements and trading volume, and made unauthorized purchases of the stocks in the accounts of unwitting investors.

http://www.thedeal.com/content/regulatory/microcap-financier-charged-in-300m-securities-fraud.php


Ok, so it was investors and brokers. Big deal, right? It has NOTHING to do with the CEO of TSGL, Brian McLoone...except:

From a TSGL 8K dated February 14, 2014

The purposes of the transactions described in this Current Report were to complete a reverse merger with the result being that EmployUS became a wholly-owned subsidiary of The Staffing Group Ltd. The Staffing Group, Ltd’s business operations will now focus on the business of EmployUS.

Mr. Brent Callais, Mr. Abraxas J. Discala, Mr. Brian McLoone and Mr. Joseph Albunio all worked together and knew each other from the staffing business and the operations of EmployUS. The Safety Group, Ltd. was formed to help expand the business of EmployUS.

Brent Callais was a founding member of EmployUS, LLC in October 2010. He founded the company with Mr. Abraxas Discala. In January 2011, Brent Callais and Abraxas Discala hired Mr. Brian McLoone as the Vice President of Operations.

www.sec.gov/Archives/edgar/data/1561622/000114420414028460/v377314_8ka.htm


G: Dividends....ROTFLMAO!!!!


H. Per a copy of the transcript of the November 7, 2015 conference call (available here: http://investorshub.advfn.com/boards/read_msg.aspx?message_id=119026984), Ryan Schadel made the following statement:

Well, unbeknownst to Command Center, we'd already had some forbearance agreements in place to all the note holder before they purchased this note. And so, there's no note holder out there even at that moment in time that could have defaulted us. We legally nipped that in the bud the minute we got wind that they were trying to buy the note.

That's very interesting considering the last information publicly released on the status of the notes was the 2015 3Q 10Q, signed November 16th. In that report, there is note after note about how each note has "passed its maturity date and the Company has not received a notice of default", but no mention of any "forbearance agreements" reached to prevent conversion or that no note holder "even at that moment in time" could have defaulted. And since by Schadel's own admission that was accomplished BEFORE Command Center purchased the note way back in May...well...I don't think it needs to be explained any further where I’m going with that since billions of shares were purchased by the CEO (starting November 20th) right before releasing that information to the public.



And now we have Ryan Schadel bragging about the introduction of 71 year old True Blue founder, Glenn Welstad, as the first member of Schadel’s so-called advisory board despite the fact that he was was forced to retire as CEO in mid 2000 after improperly taking out a $3.5 million loan from the company and has been moving from OTC company to OTC company ever since. To be fair, Welstad was responsible for the enormous initial success of Labor Ready, but bringing him to LaborSMART is an underwhelming answer to the mountain of major problems that pretty much define LaborSMART.

Buyer beware!